- Associated Press - Wednesday, November 5, 2014

BILLINGS, Mont. (AP) - Money that was loaned to Montana’s Yellowstone Club for the ultra-rich and then largely diverted to the luxury resort’s founder, Tim Blixseth, should be counted as income, a state tax board ruled.

The state Tax Appeal Board said the one-time billionaire used the money to purchase assets held in his name and to satisfy his debts.

The ruling on Monday bolsters tax claims by the state Department of Revenue against Blixseth. State officials say the Washington state resident owes $57 million in back taxes that include levies on the 2005 Credit Suisse loan.

Blixseth said in an email that he will appeal. He has 60 days to do so in state district court, according to the tax board.

Blixseth gave up control of the Yellowstone Club during his divorce from Edra Blixseth, who helped him develop the 13,600-acre golf and ski resort near Big Sky. It went bankrupt soon after he left, and courts have since ruled that Blixseth fraudulently transferred the loan money for his own use.

In the tax case, Blixseth argued that the money was not subject to taxation in Montana because the Credit Suisse loan involved offices of the bank in New York and California and the loan came from a branch in the Cayman Islands.

The tax board rejected the argument.

“The Credit Suisse transaction was negotiated in Montana with a Montana corporation (the Yellowstone Club) and used Montana property as security for the loan,” the tax appeal board said. “We find there is ample connection with Montana laws and property to conclude this is Montana source income.”

The club’s creditors are pursuing Blixseth for hundreds of millions of dollars, but his attorneys say his fortune is now gone.

Earlier this week, Blixseth appeared in a federal courthouse in Butte where he was forced to answer questions about his assets from attorneys for the Yellowstone Club Liquidating Trust.

U.S. Bankruptcy Judge Ralph Kirscher barred an Associated Press reporter and Montana Department of Revenue attorneys from attending the examination.

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